(June 11, 2015)

On June 11, 2015 the European Court of Justice (CJEU) ruled in Case C‑58/14 Hauptzollamt Hannover versus Amazon EU Sàrl (ECLI:EU:C:2015:385).

·        Is the description of goods in subheading 8543 70 10 of the [CN] to be understood as covering only apparatus which have exclusively translation or dictionary functions?

·        If the first question is to be answered in the negative, does subheading 8543 70 10 of the [CN] cover also apparatus the translation or dictionary function of which is insignificant by comparison with their principal function (in this case, a reading function)?

The facts in the main proceedings and the questions referred for a preliminary ruling

·        Amazon is a company which imports inter alia reading devices for electronic books. In addition to the hardware and software necessary for reading books, a speech output option and a programme for the reproduction of audio formats, the devices have a dictionary function. The Oxford American Dictionary and the Oxford Dictionary of English are thus pre-installed in the apparatus, and additional dictionaries may be downloaded and installed.

·        Reading devices for electronic books imported into Germany by Amazon in June 2011 were classified under CN subheading 8543 70 90 by the competent customs authorities. In July 2011 Amazon brought an objection against that classification. By decision of 20 October 2011, the Hauptzollamt Itzehoe (Principal Customs Office, Itzehoe, Germany), the competent authority at that time, reclassified the reading devices under CN subheading 8543 70 10. On 26 October 2011 Amazon sought binding tariff information from the HZA and proposed that the reading devices be classified under CN subheading 8543 70 10. However, in the binding tariff information thus delivered, the HZA decided to classify the reading devices under CN subheading 8543 70 90 on the ground that their main function is the reproduction of books stored in electronic form and not the translation or dictionary function.

·        Amazon then brought an action before the Finanzgericht Hamburg (Finance Court, Hamburg, Germany) which, by judgment of 14 February 2013, ordered the HZA to issue binding tariff information classifying the reading devices at issue in the main proceedings under CN subheading 8543 70 10. The HZA appealed on a point of law against that judgment before the Bundesfinanzhof (Federal Finance Court).

·        The Bundesfinanzhof considers that, where apparatus is to be classified in the CN, the subheading with the most precise description of that apparatus takes precedence over the subheadings relating to general descriptions. That court points out that the conditions for the application of the general rule of interpretation in Part One, Section I, A, 3(a) of the CN are not fulfilled, since there are not two subheadings capable of being taken into consideration for classifying the reading devices at issue in the main proceedings. Subheading 8543 70 90 of the CN does not constitute another possible classification for the purposes of that general rule of interpretation. As it is only a residual subheading, it can be applied only where classification in a more specific subheading is not possible, which is not the case in the main proceedings.

·        It was in those circumstances that the Bundesfinanzhof decided to stay the proceedings and refer the following questions to the Court for a preliminary ruling:

(1)   Is the description of goods in subheading 8543 70 10 of the [CN] to be understood as covering only apparatus which have exclusively translation or dictionary functions?

(2)   If the first question is to be answered in the negative, does subheading 8543 70 10 of the [CN] cover also apparatus the translation or dictionary function of which is insignificant by comparison with their principal function (in this case, a reading function)?

The CJEU ruled as follows:

The Combined Nomenclature in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff, as amended by Commission Regulation (EC) No 861/2010 of 5 October 2010, must be interpreted as meaning that a reading device for electronic books which has a translation or dictionary function must, where that function is not its principal function, that being a matter for the national court to ascertain, be classified under subheading 8543 70 90 and not under subheading 8543 70 10.

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Did you know that in our section CJEU Rulings we have made a selection of rulings of the CJEU? We have organized these rulings based on the subject they relate to (e.g. Freedom of establishment, Free movement of capital, Indirect taxes on the raising of capital, etc).

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